Understanding Washington County's Budget Situation

The County has had to make a lot of adjustments to our budget over the last few years.  I am going to attempt to explain why.

First, let's look at the County's situation from a big-picture perspective:

What we have:

• Reasonably healthy financial reserves (savings account), which are at about $12-$15 million at last check.
• A lot of land and buildings.
• Very low debt.  In fact, of the 72 counties in Wisconsin, we have one of the lowest debt rates when compared to population.
• Low employee count.  At about 850 employees, we have one of the lowest employee to population ratios of any county in Wisconsin.

Where we fall short:

• Annual budget---each year, due to levy limits, we experience about a $2 million increase in our recurring annual expenses while our revenues only increase by about $300,000.  This gives us a renewing $1.7 million dollar structural budget deficit.  Each year, we have to start our budget for the upcoming year by looking at last year's budget and removing about $1.7 million in expenses.  These numbers vary a bit, year to year, but they give us a good approximation of what we are dealing with.

I had one former County Board Supervisor tell me that we should not make any adjustments, but instead just fund those programs we'd like to adjust out of our reserves.  That's what the State of Illinois decided to do about 10 years ago, and it's why they are in fiscal peril now.  Let's look at what would happen if the County took that approach, starting with 2019 (since 2018's budget is already set):

• 2019-If we assume the best case scenario, we have $15 million in reserves.  We fund $1.7 million dollars in programs out of our reserves, reducing our reserves to $13.3 million.
• 2020-Since we did not deal with 2019's budget deficit, we start 2020's budget with a $1.7 million dollar deficit from 2019 (these are recurring annual expenses, after all) and add in the new expense increase of another $1.7 million.  we now have a total of $3.4 million that we need to fund out of our reserves.  Our $13.3 million by the end of 2020 is down to $9.9 million.
• 2021-Since we did not deal with 2019's or 2020's budget deficits, we start 2021's budget with a $3.4 million dollar deficit and add in the expense increase of another $1.7 million.  We now have a total of $5.1 million that we need to fund out of our reserves.  Our $9.9 million by the end of 2021 is down to $4.8 million.
• 2022-Since we did not deal with 2019's, 2020's, or 2021's budget deficits, we start 2020's budget with a $5.1 million dollar deficit and add in the expense increase of another $1.7 million.  We now have a total of $6.8 million that we need to fund out of our reserves.  Our $4.8 million by the end of 2022 is down to a negative $2 million, meaning we now need to borrow $2 million dollars.
• 2023-Since we did not deal with 2019's, 2020's, 2021's, or 2022's budget deficits, we start 2023's budget with a $6.8 million dollar deficit and add in the expense increase of another $1.7 million.  We now have a total of $8.5 million that we need to fund out of our reserves.  Since we have no reserves left, we need to borrow all $8.5 million, in addition to the $2 million we borrowed in 2022.  We have now increased the County debt by $10.5 million.

So in 5 years, we have burned through $15 million in reserve funds and have now borrowed $10.5 million.  If we try to go a sixth year in this approach, our new borrowing increases by $10.2 million to a total of $20.7 million borrowed over 2022-2024.  The problem just keeps getting worse until we deal with it. 

I can easily see how unsustainable this is, and I am sure you can too.  At some point we have to make budget adjustments or our situation just keeps getting worse and worse year by year.  Delaying those adjustments only makes our situation more precarious. 

I ran on a platform of fiscal responsibility, and that means balancing our budget each year.  We balanced our budget in 2017 and 2018, and need to continue making the tough choices we have been making.

During the first few years of levy limits, finding adjustments to make was very easy.  Over the years, the budget adjustments have become less easy each year.  This year, we are now looking at agencies like the Economic Development of Washington County (EDWC), a gold-star partner that has brought nearly 1,500 jobs to Washington County over the last few years.  We don't want to be making adjustments to their budget, because they are such a great partner for us and they have accomplished so much.  Unfortunately, we are at the point where we have to start looking at agencies like the EDWC.  In their case, they are showcasing their professionalism by developing a solution that will ensure that they remain sustainable and viable while completely removing themselves from the County's tax levy.

We have other programs that we need to make similar transitions with.  4-H is one of them.  4-H is an organization that is very personal to me, as my kids have both been in 4H for quite a few years.  As important as 4-H is to me, I understand the need to make adjustments.  I was at our County Administrator's presentation to 4-H, and I know they saw the need to make adjustments.  Like EDWC, 4-H appears to be interested in developing a plan over the next few year to make themselves much more self-sustainable and to present that plan to the County Board in 2 or 3 years.

I know that many of the other programs we are looking at are just as important to others in the community as 4-H is to me.  You may have a particular program that is important to you, and wish that the county would continue to fund it at the current level.  I  don't want to cut any of these programs off cold-turkey, or set any of them up to fail.  I also believe that many, if not most, of the other County Board Supervisors feel the same way.  Hopefully each program will work to find ways in which they can become much more self-sustainable.